Report on the Audit of the Standalone Financial
We have audited the accompanying standalone financial statements of Adani Power Limited (the Company”), which comprise the Balance sheet as at March 31, 2021, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the standalone financial statements”),
In our opinion and to the best of our information and
according to the explanations given to us, except for the effects of the matters described in the ''Basis for Qualified Opinion'' section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended (the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date,
Basis for Qualified Opinion
We draw attention to Note 39 to the standalone financial statements regarding Adani Power (Mundra)
Limited (APMuL''), a wholly owned subsidiary, having Mundra Thermal Power Undertaking, which has been incurring significant operational losses since earlier years, whereby net worth of APMuL has been completely eroded, For the reasons stated by the management in the Note, the performance and the financial position of APMuL over the foreseeable future is dependent on the outcome of resolution of various matters with the discoms / regulators and improvement in its future operational performance and financial support from the Company, We have not been able to corroborate the Management''s contention of realising the carrying value of its investments related to APMuL aggregating to H 5,675,13 Crores, Accordingly, we are unable to comment on the appropriateness of the carrying value of such investments and loans and advances and their consequential impact on the financial results and the
financial position of the Company as at and for the year ended March 31, 2021, Our audit report for the previous
year ended March 31, 2020 was also qualified in respect of this matter,
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of
the Act, Our responsibilities under those Standards are further described in the Auditor''s Responsibilities
for the Audit of the Standalone Financial Statements'' section of our report, We are independent of the Company in accordance with the ''Code of Ethics'' issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements,
Emphasis of Matter
We draw attention to Note 41 of the standalone financial statements, as regards the management''s evaluation of COVID-19 impact on the operations and financial metrics of the Company and its subsidiaries, Our opinion is not modified in respect of this matter,
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the standalone financial statements for the financial year ended March 31, 2021, These matters were
addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters, In addition to the matter described in the ''Basis for Qualified Opinion'' section we have determined the matters described below to be the key audit matters to be communicated in our report, For each matter below, our description of how our audit addressed the matter is provided in that context,
We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone
financial statements section of our report, including in
relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit
opinion on the accompanying standalone financial statements,
Key audit matters
How our audit addressed the key audit matter
Impairment testing of Company''s investments in and loans to subsidiaries (other than APMuL)
(Also refer Note 42 to the standalone financial statements)
As at March 31,2021, the carrying value of the Company''s
Our audit procedures in relation to evaluation of
investments (in equity shares, unsecured perpetual
impairment testing of investments in and loans to wholly
securities and compulsorily convertible debentures) and
loans given to the wholly owned subsidiaries (other than subsidiary Adani Power (Mundra) Limited) amounted to H 14,088,85 Crores and H 3,181.72 Crores, which
comprises 70,76% of the total assets of the Company,
owned subsidiaries included the following:
- We obtained an understanding from the management, assessed and tested the design and operating
effectiveness of the Company''s key controls over the impairment assessment of such investments.
The Company accounts for above investments in
- We evaluated the Company''s process regarding impairment assessment by involving our valuation experts, where necessary, to assist in assessing the appropriateness of the valuation model including the independent assessment of the underlying
subsidiaries at cost (subject to impairment assessment).
Management regularly reviews whether there are any indicators of impairment of the investments by reference to Ind AS 36 ''Impairment of Assets''.
For determining the value in use of the underlying
assumptions relating to discount rate, terminal value
businesses, discounted cash flow projections are used
which has sensitivity around the key assumptions, such as revenue growth, tariff rate, coal cost and discount
- We evaluated the cash flow forecasts (with underlying economic growth rate) by comparing them to the
rates that require considerable judgement.
approved budgets and our understanding of the
This is a Key Audit Matter as the amount of investments and
loans to subsidiaries is material to the standalone financial statements of the Company and the determination of recoverable value for impairment assessment involves significant management judgement.
internal and external factors.
- We checked the mathematical accuracy of the impairment model and agreed relevant data back to the latest budgets, actual past results and other
- We assessed the sensitivity analysis made by the management and evaluated whether any reasonably foreseeable change in assumptions could lead to material impact on carrying value of investments.
- We compared the carrying values of the investments and loans to subsidiaries with their respective net
assets values and earnings for the period.
- We evaluated the disclosures made in the standalone
Information Other than the Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does
not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements
does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial
statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Management for the Standalone Financial Statements
The Company''s Board of Directors is responsible
for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for
overseeing the Company''s financial reporting process.
Auditor''s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company
has adequate internal financial controls with reference to financial statements in place and the
operating effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management,
• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern, If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion, Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report, However, future events or conditions may cause the Company to cease to continue as a going concern,
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation,
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit,
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards,
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2021 and are therefore the key audit matters, We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication,
1, As required by the Companies (Auditor''s Report) Order, 2016 (the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1” a statement on the matters specified in paragraphs 3 and 4 of the Order,
2, As required by Section 143(3) of the Act, we report
(a) We have sought and except for the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) Except for the matter described in the Basis for Qualified Opinion paragraph, in our opinion, proper
books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive
Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are
in agreement with the books of account;
(d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may
have an adverse effect on the functioning of the Company;
(f) On the basis of the written representations received from the directors as on March 31, 2021 taken
on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from
being appointed as a director in terms of Section 164 (2) of the Act;
(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion
(h) With respect to the adequacy of the internal financial controls over financial reporting of the
Company with reference to these standalone financial statements and the operating effectiveness of such controls, refer to our separate Report in Annexure 2” to this report;
(i) The Company has not paid any managerial remuneration to its directors and thus, the provisions of section 197 read with Schedule V of the Act are not applicable to the Company for the year ended March 31, 2021;
(j) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014,
as amended, in our opinion and to the best of our information and according to the explanations
given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 38 to the standalone financial statements;
Annual Report 2020-21
ii. The Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 21 and 26 to
the standalone financial statements;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
For S R B C & CO LLP Chartered Accountants
ICAI Firm Registration Number : 324982E/E300003
per Navin Agrawal Partner
Membership Number : 056102
UDIN : 21056102AAAABC7888
Place : Bengaluru Date : May 6, 2021